Good evening all. I hope you guys are not trading this very tight range…Especially when it comes to fees…
Naturally we are assuming that volatility is going to be coming in later this evening.
When the Psy ranges form this evening, we are anticipating the psy high and low to be formed. Once these ranges are formed we can then look to exploit opportunities with price action breaking above/below the psy high/low and continuing or doing a false move above or below the psy high/low and reversing in the opposite direction.
In tonights breakdown we are going to consider the volume profile in order to help us understand when “value” is going to be shifting in a desired direction. Remember, we are always waiting on the retail trader to step in, one of the main reasons they step in is because they believe the desired price point they want to see bitcoin at is at a point of value and they will look to see it go higher in value or lower. Remember, the volume profile is the auction place…Who is happy to pay more or less?
So our first image shows the volume profile on the left of the chart which factors the ultimate point of resistance which is at 48144 and is placed at the current price point.
Now, will it take long for bitcoin to get to 48k…Most likely.
But what I want to draw your attention to is the following zones:
Blue box area (refer to the BTCUSDT Volume Profile chart)
Notice how there are very small amounts of volume inside of this zone compared to the surrounding volumes. What does this tell us?
1) Imbalance is present in the volume profile…
2) There is interest in this zone, but if no interest comes in at this point, we would assume resistance and expect price to come down if it achieves the close of the imbalance, in other words, they recover that zone, if price cant go up from there, then “value” is not being achieved in that area.
If you notice the red arrow….Pointing to the volume reading of 48.9k Why is this important…Because price came to this zone and rejected it….Which happened to be the High of 25215 that we need bitcoin to hit and break through…
So in other words can we assume that if there is no interest in traders believing bitcoin can go higher, can we assume traders are selling from this point? Retail sometimes can be smart…But the MM will always make them feel fooled and they will go beyond this zone and then make them change their original belief and then pay the price…Have you ever placed a trade and it was the opposite of what your intuition was saying? for it to only go in the original direction that you had first believed? Yes, MM can really manipulate us all.
Now looking at this the areas of value are in dark red and the main areas of value are in Blue. So bitcoin is at a value area high….And is playing around that zone, gathering orders of those with specific beliefs about value.
Refer to the 1hour time frame chart: (btcusdt Breaking down the 1hr)
Now the notes on the chart are regarding reference points that you either trade towards or away from.
E.g. If you are going to run a long on Bitcoin holding the 50 EMA, you would anticipate a fast move up towards the stop run zone…Now if you get the run up you would consider taking some profits on the breach of the 26k zone with the idea that at that point price would have been very extended and vector recovery would be at this point.
Now the simple play here would be, as long as price does not break the 50EMA on the 1hour time frame, you are good for a move higher…
A stop loss zone would for example be placed beyond the region of the 23763 zone. Why? Because this is where the price had agreed on value (look at the blue volume profile zone)
A cautionary note…Explore the volume down below in the chart.
The move to the top came in with the largest sell-off happening from that point. We know MM is operating here. yet the retrace back up with all those vectors comes in a lower volume? Is this weakness on the move-up, or the MM is controlling price and keeping it lower for the time being before they initiate a move back up to test that 25215 zone…?
We cannot dismiss the idea that bitcoin has made a significant move higher and a retrace is expected. Yet bitcoin is not following the bigger picture whicch is a cause for concern for me. If bitcoin never follows traditional markets then fine, but we see bitcoin following the markets all the time and when it doesn’t that’s when I start to get prepared for price reversing.
So ultimately we are left with two options:
1) We ride the momentum up until we believe or have taken a decent profit from it.
2) We build shorts on the idea that bitcoin will come down the same way the markets are scheduled to come down, from a macro perspective.
If you break it down to the basics…Price needs to break the 1hour 50 ema for me to exploit short-term shorts to the downside. Otherwise, its longs to be held or added to the upside.
Now with regards to the liquidation zones. You can see on the 12hr chart there is a high concentration of short liquidations near by. So price going up towards this zone is consistent with out idea that if the 1hr 50 holds then we can assume bitcoin to move towards the “Stop Run Zone” There is 249m of short liquidations at 24925. Below there is 266m of longs at 24400.
If they start to break beyond the 5 and 13 ema on the 1hr you can assume they will take those liquidations at the 24400. If they break the 50 ema on the hourly, they would have taken those liquidations at 24400…so you would have missed the opportunity to run a short (on the assumption price closes below the 5 and 13 ema on the 1 hour.
The 7 day hyblock chart doesnt really give us any distinctive zones to trade towards unless you are building shorts and want to hit the liquidations zones around the 20k region. Again, building shorts on bitcoin, use very light sizes.
Refer to the smart money chart.
Last week we had projected that smart money would start selling which would lead the price to rise up…So far we are still in line with our assumption that smart money is going to move prices higher, which would give another extreme reading on the smart money chart which would take it below the 0.3 region…I anticipate the shape of a W to appear on the smart money chart (smart money is the blue line) which would lead price higher (smart money blue line goes down) and then the price coming back down (smart money line going back up)
So given the information above…we have to ask ourselves two things…
Are we going to swing or scalp the scenarios above…
As I stated, if price continues above the 50 EMA…We can run light trades and exploit price reaching for that previous high…Or we wait until price starts to break down and trade towards vectors below…
Always ask yourself the question: WHAT DO I NEED TO SEE MORE OF FIRST?
Tomorrow evening I will be doing my Forex/indice breakdown and I will give you guys an update on what the story is with my longs on Nasdaq and how the market opens on Sunday.